Lessor’s Risk Insurance Overview
Retail, Office, and Rental Property Insurance, also referred to as, Lessors Risk Insurance (LRO), is a Small Business Insurance policy designed to protect the interests of building owners. This essential insurance policy combines both Commercial Liability and Commercial Property Insurance into one easy to use policy. The most common commercial entities that purchase Retail, Office, and Rental Property Insurance are those who own spaces in the following:
- Shopping Malls
- Office Spaces
- Warehouses
- Residential Complexes
- Apartment Buildings
- Other Retail Spaces
- And More!
This Lessors Risk Insurance policy goes by many names. Landlord Insurance, Rental Property Insurance, Retail Insurance, and Office Insurance. In order to purchase one of these policies, underwriters typically request your building is no more than 25% owner-occupied. However, this can vary from carrier to carrier, and from state to state.
At Cordova Insurance, we understand every company has its unique challenges. Our friendly and caring team is here to help you find the right Retail, Office, and Rental Property Insurance policy to cover all of your business liabilities.
Why Retail, Office, and Rental Property Insurance Is Important
Lessors Risk Insurance (LRO) is highly important for a building owner. In fact, just like an auto loan, most financial lenders will require the building owner to purchase an LRO policy, and enforce them to keep the policy for the life of the loan. On the risks side of things, imagine owning some retail offices, and one of your tenants is to blame for a large fire that destroyed a quarter of your offices. With all the money you have tied into the property, plus the loan you have out with the financial institution, how would you afford to repair all the fire damage out of pocket?
Without LRO Insurance, you face having to rebuild large parts of your offices without assistance from insurance dollars. With the cost of lumber, steel, aluminum, and labor costs these days, you could be hit with an astronomical repair bid. Without a large part of your office tenants paying their rent to you, things can fall fast like dominoes. If you cannot pay for the repairs, tenants aren’t going to make rental payments and might start to move out. Now you cannot afford to make your monthly payments on the loan anymore. Next, the lender is going to come around, asking for their payment. If you cannot provide it, you could default on your loan, losing your building, and possibly facing litigation from the financial institution. Not to mention, your business credit will be untouchable for close to 7-10 years.
Nightmare situations such as these can easily be avoided by having a Landlords policy in place.
Retail, Office, and Rental Property Insurance Coverage
Cordova Insurance offers many different insurance lines to provide comprehensive coverage for our clients. The one we recommend to building owner clients is our Lessors Risk policy. These policies typically cover:
- Theft
- Vehicle Accidents on the Premises
- Water-Related Issues (Burst pipes, backups, overflows)
- Building Fire
- Vandalism
- Weather-Related Damage
- Slip and Fall incidents, in or anywhere on the business premises
Note: By adding a rider, you could add a Pollution Liability policy, as well. However, this will vary from carrier to carrier, and from state to state.
Do You Need Coverage in Place to Cover Tenant’s Personal Items?
As the owner of the building, you are generally not responsible for your tenant’s personal property, such as office equipment, computers, etc. The tenant is renting from you and would need a Renters Insurance policy. Most building owners have tenants get Renters Insurance before they accept the lease from the tenant. This is to protect both parties’ interests and make it 100% clear to the tenants on who’s responsible for the tenant’s personal property.
Three Convincing Factors to Obtaining Lessors Risk Insurance If You Have Dropped It
- Premise Injuries – If one of your tenant’s customers is injured in the parking lot on your premises and suffers a major injury, this situation will most likely fall to you, not your tenant. If you have a Lessors Risk policy in place, the General Liability portion of the policy can help you in this situation.
- Tenant Catches Other Units on fire – You would think the tenant’s insurance policy would cover the damages they caused to their unit and surrounding units. However, most tenants only need Renters Insurance as they are not the building owners. Damages from such an event like this would fall to the building owner.
- Bringing Your Build Up to Code – Let’s say you are the owner of an older building. One day a water pipe burst, causing damage to multiple units. Once you call a plumber, they tell you your building is not up to code, and you need new piping through the whole west wing of your building. If you do not have Lessors Risk Insurance in place, with Business Ordinance Coverage being a part of the policy, you could go bankrupt trying to fix all the needed piping.
Related Policies
At Cordova Insurance, we also offer Risk Management Services to help you protect your business. With this service, our experienced agents will review your existing insurance coverage and your current and future needs. We will assess your business’ current liabilities and help you find the right insurance coverage.
Here are some related policies for building owners in the retail, office, and rental property spaces that can help round out your insurance portfolio:
- Commercial Umbrella Insurance: This coverage provides additional liability protection over and beyond your normal insurance limits. Commercial Umbrella works with your Business Liability to add extra coverage, which amps up your insurance portfolio.
- Crime Insurance: Crime Insurance provides financial protection to commercial businesses who may be at risk of theft or fraud.
- Business Income Insurance: Helps to cover the loss of income due to a covered peril. Commonly covered hazards include fire, theft, wind, flood, and more depending on the insurance company you are with.
Areas We Serve
Cordova Insurance serves the cities and towns of central Wisconsin. We are based in Merrill and serve commercial clients in the surrounding towns, including Wausau, Tomahawk, Minocqua, and Woodruff. We are a community-oriented organization, and we’re so proud to serve as insurance advocates for the hardworking business owners in our area.
Final Thoughts
You should never take the risk of running your business without insurance. No matter how well you plan, there’s always the chance of an unexpected accident happening. At Cordova Insurance, our team welcomes the challenge of helping you purchase insurance and guiding you through the process.
How Do I Learn More?
To learn more about Lessors Risk Insurance, contact Cordova Insurance Agency at (715)-536-9576. Our licensed agents will be happy to answer any questions you have.
